Northern Gas Pipelines is your public service 1-stop-shop for Alaska and Canadian Arctic energy commentary, news, history, projects and people. It is informal and rich with new information, updated daily. Here is the most timely and complete Arctic gas pipeline and northern energy archive available anywhere—used by media, academia, government and industry officials throughout the world. Northern Gas Pipelines may be the oldest Alaska blog; we invite readers tosuggest others existing before 2001. -dh

Our friend, Alaska Salmon Alliance Executive Director Arni Thomson (NGP Photo) provides us with this link to the Seattle Times: "North Dakota is booming, and its largest city has reinvented itself, attracting creative types and energetic entrepreneurs."

Recently, we pointed out that Alaska had the lowest domestic product gain of any state, during 2013...in sharp contrast to other oil producing states that are moving ahead of Alaska, including North Dakota, Texas and even California.

Dillon wrote,​ "over at the Houston Chronicle's Fuel Fix blog: Jennifer Dlouhyhas a nice summary of the Commerce Department’s decision yesterday to allow Pioneer and Enterprise to export condensates that have been lightly processed or 'stabilized' in a distillation tower, thereby turning them into 'refined products.'

"While the decision does not end the outdated policy that bans most crude oil exports," Dillon said,"it is a step in the right direction. Sen. Lisa Murkowski, the ranking Republican on the Senate Energy and Natural Resources Committee, has been pressing the Obama administration to lift the 1970s-era export ban since January. She has suggested a three-step road map to ending the ban, including allowing the export of condensates and a presidential finding that modernization of our export policy is in the national interest."

The oil export ban issue is important to Alaskans since the ability to export crude oil broadens the market for and improves the price of Alaska oil.

It is important to all Americans, since the ability to export improves US balance of payments, can assist our allies in becoming less dependent on unfriendly sources and enhances job creation.

It is important to Canada since a lifting of the US oil export ban could expand displacement and other economic strategies for most efficiently using North American energy supplies -- including throughput of the Obama-administration-delayed Keystone XL Pipeline project.

-dh

While we acknowledge local statistics of low unemployment in Alaska, we also know that can be a temporary condition unless Alaska's investment climate continues a one-year improvement trend since passage in 2013 of SB 21, the oil production tax reform bill.

If that job creating trend is killed by an ill-informed voter repeal of SB 21, Alaska will resume its slide past investment climate mediocrity toward insolvency. This is because Alaska is so dependent on oil production and sustainable oil production requires sustainable tax and regulatory treatment--among other things.

We would draw reader attention to the Resource Development Council for Alaska (RDC) story below.

Yesterday, speakers were confident in the economic future of the State, if...

...if, Alaska can become a more stable investment climate. It can do this by 1) soundly rejecting (i.e voting 'no' on) the August primary election proposition to repeal the state's improved, reformed production tax law that is already creating more investments ... and, 2) by giving investors confidence in the durability of fiscal certainty that could lead to a $40 - $60 billion LNG Export project. "It is up to us," as former legislator and incoming RDC president, Ralph Samuels (NGP Photo) said. -dh

ConocoPhillips Alaska President Trond-Erik Johansen (NGP Photo-L) pretty well summarized the theme of yesterday's Resource Development Council for Alaska Annual meeting.

In his introduction of company Chairman and CEO, Ryan Lance (NGP Photo), Johansen said, “I’m sure many of you are aware that since oil tax reform legislation was signed into law a year ago, ConocoPhillips has announced new projects and increased investment in Alaska.

“We are hopeful”, he said, that “SB21 will stay in place so we can continue to build on the momentum that is here now. This is Alaska’s time – and it feels like we’re back in the game.”

In today’s Alaska, the two big political issues du jour both concern “Investment Climate”.

Calling on a background as former government relations director for ARCO years ago, I continue to think that a “good investment climate” exists when the tax and regulatory rules are competitive with other areas, and when those “rules of the game” are stable, predictable, and durable.

In short, after you invest your money in good faith, you are harmed and deterred from future investment when government authorities change the rules of the game –- to take more of the money you make, or to make it harder for you to get a return on your investment -- after the investment is in place.

Over a decade ago, the governor and legislature raised the production tax IN EXCHANGE FOR assurances of investment climate certainty that would permit large gas pipeline investments.

So, the first issue du jour dealing with a “good investment climate”, is the upcoming effort by some citizens to trade away long-term stability – by repealing the recently passed tax reform bill, SB 21 – for higher taxes in the short term. The second issue is whether investors have sufficient faith in the durability and reliability of Alaska’s fiscal policies, to plunk down $40- $60 billion on a gas pipeline and LNG export project.

* * *

The 2013-14 RDC president, Phil Cochraine (NGP Photo-L), opened RDC’s 39th Annual Meeting at the Dena’ina Convention Center in Anchorage by introducing Anchorage's host mayor, Dan Sullivan​, who with his Energy Advisory Counsel over the years, detected the need and successfully lobbied for improved oil industry investments in the Cook Inlet area of the state.

He went on to recognize board members, veterans, staff and Paula Easley (NGP Photo), long-time executive director and then board member—who received a standing ovation.

He recognized elected officials in the room, including Lieutenant Governor Mead Treadwell, Senators Anna Fairclough,Cathy Giessel, Charlie Huggins, Kevin Meyer and several State Representatives including Mia Costello, Shelly Hughes, Craig Johnson, Bob Lynn, Lora Reinbold, Dan Saddler, Bill Stoltze and Geran Tarr and (Please let us know of others so the archives may be accurately revised.)

Alaska Oil & Gas Executive Director Kara Moriarty then addressed the large crowd of some 1,200. “Alaska runs on oil,” she said. Moriarty emphasized the importance an improved investment climate leading to improved production upon which jobs, the state budget and the future of Alaska’s children depends (NGP Photo). Pointing to the assembled children, she said, “These kids are our future ... future miners, future commercial fishermen…. It’s all about jobs.”

He said the U.S. oil and gas renaissance is growing because of a shale revolution and affirmed that the phenomenon has “staying power”. Canada is experiencing similar production increases which, together, make possible the increased export of natural gas by 2016.

At the same time, he said, Asian consumer demand for gas is providing a market for the increased gas supply. While several dozen LNG export terminals have been proposed in the U.S. and Canada, not all can be expected to be built, he said.

Alaska has fiscal challenges and Lance noted that Canada has certain ‘infrastructure challenges’, as we have discussed in these pages. The surviving LNG projects, he suggested, will likely come from areas encompassing competitive advantages, including “reasonable fiscal terms”. Lance emphasized that Alaska had advantages in the growing LNG marketplace, including its 40-year history of exporting LNG to Japan from its Cook Inlet plant at Nikiski and Alaska’s relatively close proximity to Asian markets.

He also said that Alaska’s role in producing more crude oil could be enhanced by reasonable policies. “ConocoPhillips has a 50-year history in Alaska and remains committed to the state,” he said. He said he sensed the excitement in the economy and emphasized that maintaining the tax reforms of SB 21would be, “…good for the state, good for jobs and good for industry.”

In an interview following the meeting, we discussed the nature of fiscal certainty with Lance. We asked about the importance of reliability to a gas pipeline decision. He said, “stability and certainty are pretty important when making investments over 40-50 years. “

He added that, “We just want an understanding that we can ... say this is the kind of returns we expect out of these projects and that does require some sense of fiscal certainty and stability.

“But I tell people”, he went on, “we handle this around the world everywhere. We have fiscal stabilization clauses in our contracts … with most governments and we make big investments all around the world. So this isn’t new ground we’ve had to tread.... ...we’ve done this globally, we know what it means, what we are just asking is … when we are in these big long projects that you keep us stable through the course of that period. “

We think no reasonable person would think Lance’s request to be unreasonable. Even Russians and Chinese don’t apparently think the request for fiscal certainty to be unreasonable.

As we probed the subject further, he said, “…people ask me about Russia, China, and where we’ve been for over 20 -30 years … we haven’t changed the contract most places.”

He added that in Alaska, the fiscal terms have changed, “numerous times”. He concluded, “…that’s why the companies are talking about this issue; talking about why we need to have some sense of stability and certainty as we go forward with these investments.”

If any elected official were to ask us, “how do we make the investment climate attractive to a gas pipeline investment,” we would say, “Dear Alaskan colleagues, you have a problem.”

We would explain that Alaska has to overcome the greed mentality behind statements like, “It’s our oil”, and “They represent their shareholders and we represent ours”.

Both of those statements are employed as excuses to rob investors of money after they have made investment decisions. Oil company shareholders and boards would never condone actions by their company to represent them by violating lease terms or breaking tax laws or vilifying public officials.

Yet Alaska over the last decade has taken billions more from oil companies after investments have been made and risks undertaken in good faith; passed tax legislation demanding retroactive payment; and, vilified Alaska’s most capable investors for no defensible reason.

Alaska's elected officials have given tax breaks to film producers and small oil companies that produced few jobs and little tax revenue while unfairly taxing large petroleum investors who employ many and pay much.

If Alaska wants to attract more investment leading to more oil production and a gas pipeline it had better start doing an attitude check. Like North Dakota and Texas and Oklahoma, Alaska just might be better served by admitting it is an oil state, appreciating that blessing and becoming proud of its standing as a big “oil patch state”.

Being friendly to investors does not mean giving away the store. It does mean becoming a place where, after an investment is made, the investor does not lose sleep wondering if the state’s leaders in the morning will decide they want to take more money and saddle the investor with new tax and regulatory burdens.

Like RDC President Ralph Samuels said, “It’s up to us”.

If our decision is to become a responsible investment climate, perhaps we can certify Trond-Erik Johansen’s hope that we are, truly, “back in the game”.

* See ADN story by Alex DeMarban (NGP Photo: DeMarban at press conference following luncheon speech.)

Thank you, Phil. It is my honor to serve as President of the Resource Development Council. Alaska faces many challenges, but there are also great opportunities on Alaska’s horizon.

GOLDPAN PRESENTATION TO PHIL COCHRANE

RDC has been fortunate to have both a strong board of directors and staff over the course of its nearly 40 years of existence. Our leadership team has been second to none and Phil Cochrane is no exception. Phil has served as RDC’s president for two consecutive years and helped guide our team as Senior Vice President for the two years prior.

At this time I would like to present Phil with our traditional President’s Gold Pan in appreciation for his service to RDC. Thank you Phil for your leadership, hard work, and unending commitment to the mission of RDC – growing Alaska’s economy through responsible resource development. (Applause)

LEGISLATURE AND OIL PRODUCTION TAXES

Over the past year, the 28th Alaska legislature and Governor Parnell’s administration made significant progress in affecting positive change for Alaska’s natural resource dependent economy. RDC members engaged in a proactive way by testifying, writing, calling and visiting their elected leaders on important issues. To all of you who responded to our repeated action alerts, thank you! If you didn’t step up, there is more work to do and there will be many opportunities to make your voice heard.

The legislature and administration made progress on advancing a large-diameter Alaska gas pipeline project by passing enabling legislation that empowers the state to become an owner in the Alaska LNG project. The legislature also passed injunctive security legislation relating to industrial operations in our state – an issue RDC has been working on for several years to bring more fairness and reason into the litigation process. RDC was at the forefront of these and many other issues.

For years RDC has been advocating for the reform of ACES, the oil and gas production tax put in place in 2007 that has been hugely responsible for an accelerated North Slope production decline. As you all know, oil production tax reform finally passed the legislature last year and RDC’s top priority this year is to defeat Ballot Measure 1, which would repeal the new tax structure that took effect January 1st and bring back the old failed ACES tax regime.

The new tax policy is a significant improvement and the industry’s response is encouraging. There is good reason to be optimistic that Alaska is back in the game and that the stage is now set for a future of growth and opportunity. At this time I would like to call on RDC Executive Committee member Kara Moriarty to further address this critical issue.

INTRODUCTION OF TROND-ERIK JOHANSEN

Thank you Kara. Turning to our program, RDC is pleased to welcome both Trond-Erik Johansen and Ryan Lance to our program. Mr. Johansen will be first out of the gate, followed by our keynote speaker. Mr. Johansen is president of ConocoPhillips Alaska, a position he assumed in April 2010. He joined ConocoPhillips in 1986 and has held a variety of petroleum engineering, well engineering and leadership positions in numerous locations in the U.S. and abroad. Please welcome Trond-Erik Johansen.

(Note for Ralph: Trond-Erik will introduce Ryan Lance)

FOLLOW-UP REMARKS

(Any personal comments and reflections on the presentation. Present to Ryan as a token of our appreciation, Judy Patrick’s new book, “Photographs of Alaska’s North Slope: Arctic Oil.”)

FINAL COMMENT

A big thank you once again to all of our sponsors for their generosity, and each and everyone one of you for your ongoing support of RDC. With all of us working together, we can build a prosperous economy and overcome the challenges before us.

I would like to remind everyone to visit the RDC website at akrdc.org on a regular basis for the latest industry and issue updates. Today’s presentation, as well as all other RDC events and breakfast meetings, are available online.

Please mark your calendars for RDC’s annual conference this fall, which will be held on November 19-20th here at the Dena’ina. Our breakfast forums will resume in September.

One final note, in the next decade alone, Alaska will need to fill 7,500 oil and gas jobs. And with the potential Alaska LNG project and other oil and gas projects, there will be even more jobs available for Alaskans. The Alaska Department of Labor and Workforce Development – in partnership with industry and other stakeholders – unveiled a comprehensive workforce plan to prepare for oil and gas jobs now and in the future. There are cards on the tables at the back with more information. You can also go to the department’s website at Labor DOT Alaska DOT GOV.

In addition, as you leave today, please take with you a copy of our 2014 Annual Report, which is available on the tables and at the exits.

Finally, remember to VOTE NO ON 1 come Tuesday, August 19th!

This concludes the 39th Annual Meeting of the Resource Development Council. Thank you all!

Today, the House Natural Resources Committee approved four targeted bills that would improve and moderni

ze the Endangered Species Act (ESA). The primary focus of these four bills is to promote data and cost transparency and species recovery.

WSJ. The next time someone says the John Roberts Supreme Court consistently blocks Obama Administration policy, be sure to ... mention Tuesday's 6-2 ruling that anoints the Environmental Protection Agency's...

These bills have been endorsed by over 25 organizations including, the U.S. Chamber of Commerce, Family Farm Alliance, National Rural Electric Cooperative Association, American Farm Bureau Federation, the National Association of Counties, National Cattlemen’s Beef Association, the National Water Resources Association, Washington Farm Bureau, Oregon Farm Bureau, Public Power Council, and National Association of Conservation Districts.

CH/CP. Former federal environment minister Jim Prentice (NGP Photo) hasn’t yet formally announced his intention to seek Alberta’s premiership, but ... Stewart Phillip, the grand chief of the Union of British Columbia Indian Chiefs, said he ... respects the willingness of the former land claims negotiator to hear his opponents’ point of view.

“There is widespread support for conserving endangered species, but that doesn’t mean there isn’t room for improvement. This is a 40-year-old law that was last reauthorized in 1988; certainly there are ways to bring this law into the 21st century and make it work better for both species and people. These are four common sense bills that are very narrowly focused and make targeted improvements to the law in the areas of transparency and species recovery,” said Chairman Doc Hastings (NGP Photo).

...an internal EPA memo from September 2010 that acknowledges taking proactive action to veto or restrict development at Pebble has ‘never been done before in the history of the CWA’ and will result in ‘immediate political backlash from Alaska’ and anticipates litigation. The memo also indicates EPAs ambition to vastly expand its authority, calling the Pebble precedent a ‘model of proactive watershed planning’ that will allow it to undertake ‘watershed planning’ over vast areas of state, private and tribal lands anywhere in the United States.

"The actions EPA is contemplating today go well beyond Pebble. It is a precedent that will be leveraged by environmental activist groups and will have a chilling effect on future investment and job creation throughout the country. Congress never intended to grant EPA the authority to undertake proactive watershed zoning over broad areas of state and private lands when it passed the Clean Water Act, yet that is exactly what is happening here.

Nullifying the EPA in Alaska

by

Ric Davidge

This is an urgent call for the Alaska State Legislature to pass emergency legislation nullifying any and all application of EPA federally promulgated water and air quality regulations as they are not constitutionally based consistent with the original intent of Article 1, Section 8, Clause 3 (the commerce clause) of the United States Constitution, and that the EPA has no authority over any state or private lands within the State of Alaska.

An Act relating to the United States Environmental Protection Agency rules; declaring certain federal rulemaking authority is not authorized by the United States Constitution; stating legislative duty to prevent enforcement of certain rules; stating exceptions; providing for codification; and declaring an emergency.

Be it enacted by the People of the State of Alaska:

Section 1. A new section of law to be codified in the Alaska statues as section ____ of Title ____, unless there is created a publication in numbering, reads as follows:

A. The Legislature declares that the rulemaking authority of the Environmental Protection Agency is not authorized by the Constitution of the United States and violates its true meaning and intent as given by the founders and ratifiers, and is hereby declared to be invalid in the State of Alaska, shall not be recognized by this state, is specifically rejected by this state, and shall be considered null and void and of no effect in this state.

Calgary Herald. Canadian oil and gas producers were “overly optimistic” heading into 2013, failing to predict a slowdown in business activity over the last 12 months and the job losses that have occurred as a result.

Alaska US Senator Lisa Murkowski Releases Energy White Paper

by

Dave Harbour

Yesterday we briefed readers on a webcast speech Senator Lisa Murkowski (NGP Photo) would deliver today at 9 a.m. EST in Washington to a Brookings Institute audience. Brookings promoted the speech as a discussion of the, "future of U.S. energy trade and its implications on the domestic economy and national security."

Most of us west of the DC beltway had to get up early for the on-line presentation (i.e. 5 a.m. Alaska time) but it was worth it.

For researchers:

Senator Lisa Murkowski this morning released a white paper on U.S. energy export policy, A Signal to the World: Renovating the Architecture of U.S. Energy Exports.

Murkowski used the webcast speech to make public release of her new 20 page white paper, "A Signal to the World: Renovating the Architecture of U.S. Energy Exports." Her message centered around modernizing antiquated laws and regulations and removing an unnecessary crude oil export ban. She spoke in her capacity as ranking member of the Senate Energy and Natural Resources Committee.

Murkowski said the fact that the United States was producing more energy than ever before occurred in spite of the federal government's policies, not because of them.

Antiquated statutes, policies, and regulations, she pointed out, contributed to inefficient agency administration, lack of clarity for investors and concepts enacted decades ago when the nation's challenges and energy supply potential were different.

Murkowski noted two goals of her energy initiative: "The first" she said, "is to highlight facts. Consensus about the facts is the basis for productive dialog. My second goal is to help frame a conversation about the state of U.S. energy exports, the 'architecture of the energy trade.'”

She addressed a common theme that not exporting natural resources/energy would mean that more would be available for US consumers. Murkowski said that modernizing the "architecture of U.S. energy exports" will be a positive signal to investors and to other world markets, improve balance of payments, minimize permitting delays, create jobs and help resolve "mismatching" of supplies and refined products and keep energy more affordable for American consumers.

Her other view of improving supply and controlling prices: "...we should be opening up federal lands to energy production, not closing them off. I can think of a few places in Alaska that could be opened up immediately for new oil production, which would lower gasoline prices."

Brookings Institution Senior Fellow, Foreign Policy, Charles K. Ebinger (NGP Webcast Photo, Left), moderated the event. He said that Murkowski's was one of the most important speeches presented to his forum.

The Republic — Kevin Sweeney is returning as Sen. Lisa Murkowski's state director. Sweeney will replace Miles Baker, who will serve as director of government relations and external affairs for the Alaska Gasline Development Corp. That's the group charged with advancing an in-state gas line in Alaska.

Alaska North Slope Borough Mayor Charlotte Brower (NGP Photo) welcomed news late yesterday that the U.S. Senate has passed federal legislation, the “Responsible Helium Administration and Stewardship Act”, that provides $50 million in new federal funding for the cleanup of oil and gas “legacy” wells within the National Petroleum Reserve-Alaska (NPR-A).

Between 1944 and 1982, the U.S. Navy and U.S. Geological Survey drilled 136 wells in Northern Alaska. The wells were abandoned. Only a handful of these 136 legacy wells have been plugged and remediated in compliance with State standards. (AOGCC Photo; See our 6-13-13 commentary. -dh)

Earlier this week, the Bureau of Land Management (BLM) released a plan to remediate 16 of the highest priority legacy wells. “I welcome BLM’s plan,” Brower said. “But for many years, BLM has lacked the resources necessary to clean up and remediate high priority wells in a timely manner. In fact, earlier this year, the Administration proposed a federal budget for FY 2014 that would have diverted Alaska’s share of revenue derived from oil and natural gas activity in the NPR-A to pay for the cleanup of legacy wells drilled by the federal government. This is unacceptable, and in a meeting with Secretary of the Interior Sally Jewell this summer, I expressed my dismay that the Administration would take funding away from our communities to pay to clean up a federal mess.”

The Responsible Helium Administration and Stewardship Act, H.R. 527, authored by Senators Lisa Murkowski (NGP Photo) and Ron Wyden (NGP Photo), would close the Federal Helium Reserve in Texas, generating $500 million in federal revenue over the next decade. The legislation directs $50 million of that funding for the cleanup of legacy wells, spread across three fiscal years: (Full release here, thanks to: Richard Camilleri, Office of the Mayor, Barrow)

We have made careful note over the years of many instances of "Federal overreach" in Alaska. We have organized those examples into a category (below left) called "Federal Obstruction". Reviewing the video below reminds us that we may sometimes miss instances where a Federal agency has efficiently moved due process to a rational conclusion benefiting Alaska. Moving in a timely way to grant a right of way over federal lands for the Alaska Gasline Development Corporation might be one example that seems to reflect Federal regulatory competence benefiting Alaska; kudos to the Bureau of Land Management. We invite readers to submit a paragraph describing other instances of Federal natural resource decisions benefiting Alaska--either with or without your identity. Submit those ideas anytime and we will archive them under our story category of "Federal Progress." -dh